Twenty First Century Fox Abandons Time Warner Acquisition Bid

Twenty First Century Fox, the Rupert Murdoch-led entertainment company, has reportedly dropped its bid to acquire Time Warner, its rival company that owns HBO and CNN.

In an official statement, Murdoch said that Twenty First Century Fox has withdrawn its bid to take over Time Warner not only because it rejected the bid but also because market reaction to the proposal was not too positive.

"We viewed a combination with Time Warner as a unique opportunity to bring together two great companies, each with celebrated content and brands.  Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its Board refused to engage with us to explore an offer which was highly compelling," Murdoch said.

"Additionally, the reaction in our share price since our proposal was made undervalues our stock and makes the transaction unattractive to Fox shareholders.  These factors, coupled with our commitment to be both disciplined in our approach to the combination and focused on delivering value for the Fox shareholders, has led us to withdraw our offer," he added.

In July, Time Warner revealed that it had received an unsolicited offer from Twenty First Century Fox to take over all its outstanding common stock for a "combination of 1.531 of Twenty-First Century Fox Class A non-voting common shares and $32.42 in cash per share."

However, Time Warner declined the offer stating that the deal was not in the best interests of its shareholders and there was a certain amount of risk involved in Twenty-First Century Fox's nonvoting stock. Time Warner was also skeptical of the company's ability to manage the size and scope of both the media firms combined.

According to the New York Times, Twenty-First Century Fox had been pursuing Time Warner from early June. Time Warner reportedly discussed the offer at length with its board and came to the conclusion of rejecting its offer. However, inside sources told the publication that Murdoch was determined to strike a deal.

Experts said a combination of the two largest entertainment networks could create a behemoth company. They also predicted that Murdoch would keep pursuing Time Warner and raise his bid for the company. Therefore, the announcement came as a bit of surprise.

In the statement, Murdoch added that Twenty First Century Fox was in a supremely successful position was committed to "disciplined capital allocation and returning value to shareholders in a meaningful way."

"21st Century Fox's future has never been brighter.  The strength of our leading franchises, combined with the power of our emerging growth businesses and the leadership positions of our international enterprises put us on a path for even greater success," Murdoch added.